FILE - North Carolina Department of Health and Human Services Secretary Mandy Cohen

North Carolina Department of Health and Human Services Secretary Mandy Cohen

(The Center Square) – The North Carolina Department of Health and Human Services (NCDHHS) failed to properly screen Medicaid providers, potentially leading to millions of dollars in improper payments, a state audit found.

According to the audit released by State Auditor Beth Wood, the NCDHHS' Division of Health Benefits kept providers with revoked licenses and histories of fraud and sexual misconduct enrolled in the program.

One provider still was enrolled in the state's Medicaid claims processing system as of January, despite being indicted for $13 million in Medicaid fraud. According to the audit, which was released Thursday, the operators of Agape Healthcare Systems and Assured Healthcare Systems submitted false ownership information in their enrollment and re-verification applications. One of the owners had a prior felony conviction for identity theft, the audit report said.

"If the division had verified the ownership information during the re-verification process, it would have performed the necessary background check, discovered the felony conviction, and had the opportunity to remove the provider from the Medicaid program," Wood wrote.

According to a sample review of 191 approved provider re-verification applications, 21 providers did not disclose complete and accurate information, including a facility president who also was a defendant in a $60 million lawsuit for Medicaid fraud. From Jan. 1, 2018, to June 30, 2020, the facility received $1.8 million in Medicaid payments. The state paid about $42 million in total Medicaid payments to the 21 providers who falsified paperwork.

The audit also showed the NCDHHS did not immediately remove providers from the Medicaid program who had professional licenses suspended or terminated or had other license discrepancies. As a result, 21 unlicensed providers (from a sample of 66) received $1.64 million in Medicaid funds from the time their licenses were inactive until June 2020. One of the providers received $1.6 million from Medicaid from April 26, 2018, despite allegations of inappropriate exams of female patients and watching pornography while on duty.

The NCDHHS has since removed 14 of the providers with suspended or terminated licenses from the Medicaid program because of the audit, Wood said.

The audit also found the NCDHHS allowed 36 providers who had license limitations to stay on the program. Those providers had license restrictions that came from negligence, malpractice, fraud or professional or sexual misconduct. The NCDHHS also paid $11.2 million to unaccredited providers.

NCDHHS Secretary Dr. Mandy Cohen said she agreed with the audit's results and has directed the Medicaid division to make the issues identified in the report a "top priority."

The auditor advised the NCDHHS to remove all unlicensed, unaccredited and troubled providers from the Medicaid program and run accurate background checks and provider screenings.

Cohen said the NCDHHS already has implemented some of the recommended changes.

"For those that require additional actions, Medicaid will provide me with monthly updates on their progress, and I will provide an update in three months," she said.

Cohen also said officials in the Medicaid division did not know they could terminate providers with license restrictions, but they have since created a new policy to do so. According to Wood, state and federal law does not specify that the agency could terminate those providers, but she was able to confirm after seeking guidance from federal officials.

State Sen. Joyce Krawiec, R-Davie, a co-chair of the Senate Health Care Committee, said she expects problems in a large program like Medicaid, but the issues identified in the audit seem "so basic and so problematic."

"It raises serious questions about DHHS' ability to administer the program," Krawiec said. "Worse, the very people responsible for these failures advocate for adding 500,000 people to its rolls."

Staff Reporter

Nyamekye Daniel has been a journalist for four years. She was the managing editor for the South Florida Media Network and a staff writer for The Miami Times. Daniel's work has also appeared in the Sun-Sentinel, Miami Herald and The New York Times.